Should A Home Be Allowed Into Repossession After A Spouse Dies?

Q: My husband passed away last summer. We owned a motor home that wasn’t paid for. The loan for the motor home is just in my husband’s name at the bank and the loan officer suggested that I allow them to repossess it as my name is not on the loan. I inherited our house and it had both names on it when my husband died. Should I let them repossess it?

Sharon

Athens, AL

A: I wouldn’t let them repossess it because banks have the right to then sell the item repossessed at wholesale or dealer’s price and hold the person on the loan responsible for the difference between what it sold for and what was owed. This is called a deficiency judgment.

It’s really unjust that the bank can sell an automobile or other vehicle at a sale not open to the public. You have to be a licensed dealer to attend these auctions. Many banks keep an inventory of repossessed boats, cars and motorcycles that they attempt to sell to recoup their loss, but at the end of the day, whatever the difference is, that amount is owed by the person on the note.

It may be that if you probated your husband’s estate and closed the estate that there would not be a way for them to obtain a collectable judgment against the estate.

What bothers me is that there are exceptions for known creditors of an estate and this exception could very well apply in this case. I would attempt to sell the motor home for the amount of the loan or have someone trustworthy take over the payments in exchange for the motor home. The bank won’t work as hard as you will to get fair value for the motor home and your property may be in jeopardy for the amount of the deficiency.

If you probated a Will and closed the estate, you might have a way around it but the bank will sell it and they will get a deficiency judgment. Without knowing all of the facts, I have a bad feeling about allowing a repossession without an attempt to sell it for full value. Remember that under the contract that your husband had with the bank, not only does he owe the amount outstanding but will owe for the cost of repossession and sale, plus reasonable attorney’s fees for the deficiency judgment. It all adds more to the amount owed.